Global debt markets show dollar dominance moves in cycles, US Fed says
A recent study by the US Federal Reserve argues that despite periodic challenges, a lack of credible alternatives has kept the dollar at the center of global bond markets.
A new Federal Reserve discussion paper finds that the US dollar’s role in global bond markets has risen and fallen in cycles over the past six decades, with no clear long-term trend toward either greater dollar dominance or de-dollarization.
Using the Bank for International Settlements’ (BIS) international debt securities database, the authors identify three distinct “dollarization waves” since the 1960s, showing that shifts in currency use have followed cyclical patterns rather than a steady structural change in global financing.
“We find no monotonic dollarization or de-dollarization trend; instead, the dollar’s share exhibits a wavelike pattern,” the paper says.
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